Understanding Trading Psychology 1

Apeh Emmanuel

Jul 29, 2022
Most of the things that affects your trades are your emotions, Greed, Fear, Excitement, Anxiety, Panic, etc.

Knowing that trading is 80% emotions How can you fix this psychological problem you may ask... Today, we'll discover ways to improve our #psychology and mindset while trading.

1. Exercise discipline
The ability to apply self-control to one's feelings and emotions enables one to overcome weaknesses. For traders to develop their mindset, this quality is crucial. A trader with discipline will stay focused on the trading plan, trade patiently, and stay away from trading on hype.

2. When trading, avoid having a "loss aversion" mentality.

Investors that are more worried about suffering losses than experiencing profits are said to have a loss aversion. These mindset-trapped investors let their fear of losses impair their judgment. Investors who sell their gains and hold onto their losers while trading is said to have loss aversion.

Imagine that a fan of Nike footwear has just learned about the brand's most recent product. He has excellent financial standing and would adore owning these sneakers, but he does not want to "lose" his hard-earned money in the process. He disregards the benefits of buying these pair of sneakers since he views the money spent on it as a waste. This demonstrates how absurd the concept of loss aversion is.

The investor loses sight of the potential profits and gains that can be made from trade with careful planning because he is so afraid of losing his money.

3. Take regular breaks
Do not attack the market with your trades. It's recommended to take pauses sometimes and adjust your trading strategies as necessary. Many people overtrade. When you make profits, pause, when you make losses pause. The market will always remain there. Stop trading like the money is running. When you over trade, you make mistakes.

4. Have a secondary source of income besides trading if you can. This provides funding for your wallets and eases the strain experienced during trading. The "get rich quick" syndrome is also curtailed.

5. Do not let practice discourage you. Only by practicing and learning new techniques will you be able to gain experience. Recall that seasoned traders modify their thinking by applying the information and lessons they've learned from trading.

6. Use stop loss and take profit orders. To help you guide the trade, incorporate this in your trading plan. This falls under risk management tools.

7. Due to the volatility of the cryptocurrency market, it is understandable to let fear, greed, and other negative mindsets influence your trading decisions. However, you won't be successful until you have mastered emotional control.